huu-ay-aht first nations financial statements for the year ... · hfn as at march 31, 2019 and its...

Huu-ay-aht First NationsFinancial StatementsFor the year ended March 31, 2019

Huu-ay-aht First NationsFinancial StatementsFor the year ended March 31, 2019

Contents

Management's Responsibility for Financial Reporting 3

Independent Auditor's Report 4 - 5

Financial Statements

Exhibit A - Statement of Financial Position 6

Exhibit B - Statement of Change in Net Financial Assets 7

Exhibit C - Statement of Operations 8

Exhibit D - Statement of Cash Flows 9

Summary of Significant Accounting Policies 10 - 13

Notes to Financial Statements 14 - 25

Schedule 1 - Expenses by Object 26

Schedule 2 - Government Services 27

Schedule 3 - Economic Development 28

Schedule 4 - Community Services 29

Schedule 5 - Special Program 30

Management's Responsibility for Financial Reporting

The accompanying financial statements of the Huu-ay-aht First Nations (the "Nations") are theresponsibility of management and have been approved by the Executive Council of the Nations.

The financial statements have been prepared by management in accordance with Canadian publicsector accounting standards. The financial statements are not precise since they include certainamounts based on estimates and judgments. When alternative accounting methods exist, managementhas chosen those it deems most appropriate in the circumstances, in order to ensure that the financialstatements are presented fairly, in all material respects.

Management maintains systems of internal accounting and administrative controls of high quality,consistent with reasonable cost. Such systems are designed to provide reasonable assurance that thefinancial information is relevant, reliable and accurate and the Nations' assets are appropriatelyaccounted for and adequately safeguarded.

The Executive Council is responsible for ensuring that management fulfills its responsibilities forfinancial reporting and is ultimately responsible for reviewing and approving the financial statements.

The Executive Council reviews the Nations' financial statements and recommends their approval to thePeople's Assembly. The Executive Council meets periodically with management, as well as the externalauditors, to discuss internal controls over the financial reporting issues, to satisfy themselves that eachparty is properly discharging their responsibilities, and to review the annual report, the financialstatements and the external auditor's report. The Executive Council takes this information intoconsideration when approving the financial statements for issuance to the citizens. The ExecutiveCouncil also appoints the engagement of the external auditors.

The financial statements have been audited by BDO Canada LLP in accordance with Canadian generallyaccepted auditing standards on behalf of the citizens. BDO Canada LLP has full access to the Nations.

Acting Executive DirectorMarch 18, 2020

3

Associate Executive DirectorMarch 18, 2020

Independent Auditor's Report

To the Executive Council of the Huu-ay-aht First Nations

OpinionWe have audited the financial statements of the Huu-ay-aht First Nations ("HFN"), which comprise theStatement of Financial Position as at March 31, 2019 and the Statements of Operations, Change in NetFinancial Assets, and Cash Flows for the year then ended, and notes to the financial statements,including a summary of significant accounting policies.

In our opinion, the financial statements present fairly, in all material respects, the financial position ofHFN as at March 31, 2019 and its results of operations, change in net financial assets and cash flows forthe year then ended in accordance with Canadian public sector accounting standards.

Basis of Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Ourresponsibilities under those standards are further described in the Auditor's Responsibilities for theAudit of Financial Statements section of this report. We are independent of HFN in accordance withthe ethical requirements that are relevant to our audit of the financial statements in Canada and wehave fulfilled our ethical responsibilities in accordance with these requirements. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Emphasis of Matter - Restated Comparative Information

We draw attention to Note 1 to the financial statements, which explains that certain comparativeinformation presented for the year ended March 31, 2019 has been restated. Our opinion is notmodified in respect of this matter.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements inaccordance with Canadian public sector accounting standards, and for such internal control asmanagement determines is necessary to enable the preparation of financial statements that are freefrom material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing HFN's ability to continueas a going concern, disclosing, as applicable, matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate HFN, or to ceaseoperations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing HFN's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a wholeare free from material misstatement whether due to fraud or error, and to issue an auditor's reportthat includes our opinion. Reasonable assurance is a high level of assurance, but is not a guaranteethat an audit conducted in accordance with Canadian generally accepted auditing standards will alwaysdetect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to beinfluence the economic decisions of users taken on the basis of these financial statements. As part ofan audit in accordance with Canadian generally accepted auditing standards we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

4

Independent Auditor's Report - Continued

Identify and assess the risks of material misstatement of the financial statements whetherdue to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances. But not for the purpose of expressingan opinion on the effectiveness of HFN's internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis ofaccounting, and based on audit evidence obtained, whether a material uncertainty existsrelated to events or conditions that may cast significant doubt on HFN's ability to continue asa going concern. If we conclude that a material uncertainty exists, we are required to drawattention in our auditor's report to the related disclosures in the financial statements or, ifsuch disclosures are inadequate, to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor's report. However future events orconditions may cause HFN to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements,including the disclosures, and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters the plannedscope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during the audit.

Chartered Professional Accountants

Vancouver, British ColumbiaMarch 18, 2020

Huu-ay-aht First NationsExhibit A - Statement of Financial Position

As at March 31 2019 2018

(Restated - Note 1)

Financial AssetsCash (Note 2) $16,145,854 $ 18,196,343Restricted cash (Note 3) 66,653 63,671Accounts receivable (Note 4) 157,582 955,958Due from related parties (Note 8) 2,487,509 2,501,643Wealth funds (Note 5) 14,195,695 13,834,082Settlement funds (Note 5) 1,061,024 1,030,877Investment in the Nations' business entities (Note 11) 19,528,981 12,375,879Portfolio Investments (Note 12) 7,968,068 -

61,611,366 48,958,453

LiabilitiesBank indebtedness (Note 14) 965,000 980,000Accounts payable and accrued liabilities 1,000,761 1,656,479Deferred revenue (Note 6) 1,521,441 41,822Long term debt (Note 7) 8,996,120 2,862,059Minor trust reserve (Note 17) 1,607,806 1,631,880

14,091,128 7,172,240

Net Financial Assets 47,520,238 41,786,213

Non-financial AssetsTangible capital assets (Note 9) 24,458,503 22,999,712Crab fishing licence 1,035,275 -Prepaid expense 498,576 229,990

25,992,354 23,229,702

Accumulated Surplus (Note 10) $73,512,592 $ 65,015,915

Approved on behalf of the Executive Council:

Chief Councilor Councilor

Councilor Councilor

Councilor Councilor

Councilor

The accompanying summary of significant accounting policies and notes are an integral part of these financial statements.

6

Resigned

Huu-ay-aht First NationsExhibit B - Statement of Change in Net Financial Assets

2019 2018(Restated - Note 1)

Surplus - Exhibit C $ 8,496,677 $ 22,623,608

Purchases of tangible capital assets (2,527,915) (6,622,908)Purchase of licence (1,035,275) -Amortization of tangible capital assets 1,034,477 993,361(Gain) / loss on sale of tangible capital assets (10,353) -Proceeds on sale of tangible capital assets 45,000 -Change in prepaids (268,586) 73,559

(2,762,652) (5,555,988)

Increase in net financial assets 5,734,025 17,067,620Net financial assets, beginning of year 41,786,213 24,718,593

Net financial assets, end of year $47,520,238 $ 41,786,213


7

Huu-ay-aht First NationsExhibit C - Statement of Operations

Budget 2019 2018(Restated - Note 1)

(Note 15)

RevenueIndigenous Services Canada $ 5,804,492 $ 8,164,738 $ 20,435,782Industry funds 9,940,000 7,553,278 11,871,073Investment income 600,000 391,760 1,496,265Other revenue 3,353,156 3,383,172 2,446,340Province of British Columbia 151,764 152,415 151,113Nuu-chah-nulth Tribal Council 40,000 268,054 183,416Canada Mortgage and Housing Corporation - 26,235 26,235Cost recoveries - 254,446 751,926Earnings from investment in the Nations' business partnerships (Note 11) - 7,153,732 2,880,576Loss from investment in the Nations'business enterprise (Note 11) - (630) (1,051)Sale of tangible capital assets - 10,353 -

19,889,412 27,357,553 40,241,675

ExpensesGovernment services 6,661,712 7,065,534 4,676,786Economic development 1,073,679 658,887 537,865Community services 5,558,925 5,233,100 3,483,012Special program 4,705,350 5,903,355 8,920,404

17,999,666 18,860,876 17,618,067

Annual surplus 1,889,746 8,496,677 22,623,608Accumulated surplus, beginning of the year 65,015,915 65,015,915 42,392,307

Accumulated surplus, end of the year $ 66,905,661 $ 73,512,592 $ 65,015,915


8

Huu-ay-aht First NationsExhibit D - Statement of Cash Flows

For the year ended March 31 2019 2018(Restated - Note 1)

Operating transactionsAnnual surplus $ 8,496,677 $ 22,623,608Non-cash items

Amortization 1,034,477 993,361Gain on sale of tangible capital assets (10,353) -Earnings from investment in the Nations' business partnerships (7,153,732) (2,880,576)Loss from investment in the Nations' business enterprises 630 1,051

Changes in working capital accountsAccounts receivable 798,376 (672,119)Accounts payable and accruals (655,718) 278,026Deferred revenue 1,479,619 (23,794)Prepaid expenses (268,586) 73,559Funds held in trust (415,834) 88,207

Cash flows from operating transactions 3,305,556 20,481,323

Capital transactionsPurchase of tangible capital assets (2,527,915) (6,622,908)Proceeds on sale of tangible capital assets 45,000 -Purchase of licence (1,035,275) -

Cash flows from capital transactions (3,518,190) (6,622,908)

Investing transactionsIncrease (decrease) in restricted cash (2,982) (693)Capital draws from investment in the Nations' business partnership 29,000 538,517Investment in the Nations' business partnerships (29,000) (131,000)Investment in TFL44LP (7,968,068) -

Cash flows from investing transactions (7,971,050) 406,824

Financing transactionsProceeds from issuance of long term debt 6,500,000 -Repayment of long term debt (365,939) (691,811)Bank indebtedness (15,000) 20,000Advance from related parties 29,356 -Advance to related parties (15,222) (241,551)

Cash flows from financing transactions 6,133,195 (913,362)

Net increase (decrease) in cash (2,050,489) 13,351,877

Cash, beginning of year 18,196,343 4,844,466

Cash, end of year $16,145,854 $ 18,196,343


9

Huu-ay-aht First NationsSummary of Significant Accounting Policies

March 31, 2019

Basis of Presentation These financial statements have been prepared in accordance withCanadian Public Sector Accounting Standards.

The Huu-ay-aht First Nations (the "Nations") is under self governmenteffective April 1, 2011.

The formation under self-government has also brought access to WealthFund (Note 5) and Settlement Funds (Note 5).

Program Accounting The Nations use fund accounting procedures which result in a self-balancing set of accounts for each fund established by legal, contractualor voluntary actions. The various funds have been amalgamated for thepurpose of presentation in the Financial Statements. The Nations maintainthe following funds:

Operating FundReports all government administration activities and related operatingactivities that are fully or partially funded by government or theiragencies.

Capital FundReports the capital assets of the Nations together with their relatedfinancing.

Business FundReports on assets, liabilities and activities of the investments owned orcontrolled by the Nations.

Wealth and Settlement FundReports on trust funds held in trust for the Nations.

Social Housing Special FundReports the assets, liabilities and activities of the Canada Mortgage andHousing Corporation ("CMHC") subsidized rental housing operations.

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March 31, 2019

Reporting Entity andPrinciples The Nations' reporting entities include the Nations' government and all

related entities which are accountable to the Nations and are eitherowned or controlled by the Nations.

Incorporated business entities, which are owned or controlled by theNations and which are not dependent on the Nations' for their continuingoperations, are included in the summary financial statements using themodified equity method. These include: Huu-ay-aht First NationsDevelopment Limited Partnership and its general partner, Huu-ay-aht FirstNations Development Corporation (Wholly owned) and Nuu-chah-nulthSeafood Limited Partnership (16.67% ownership)

Wealth Fund and Settlement Fund Portfolio investments in the wealth fund and settlement fund include cash

and cash equivalents, bonds and preferred shares, Canadian Equities, U.S.equities, and International equities. Portfolio investments are carried atcost plus accrued interest but are written down to net realizable valuewhen there has been, in management's opinion, a permanent decline invalue.

Use of Estimates The preparation of financial statements in accordance with Canadianpublic sector accounting standards requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities at the date of the financial statements, and the reportedamounts of revenues and expenses during the reporting period. Actualresults could differ from management's best estimates as additionalinformation becomes available in the future. Significant estimatesincluded in these financial statements include the valuation of accountsreceivable, completeness of liabilities and accruals, useful lives oftangible capital assets and estimates of performance obligations relatedto deferred revenue.

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March 31, 2019

Tangible Capital Assets Property, equipment and infrastructure expenditures are valued atacquisition cost and recorded in the the Capital Fund.

Tangible capital assets acquired as part of the Social Housing Fund arerecorded in that fund.

Tangible capital assets recorded are amortized annually with acorresponding reduction in Investment in Tangible Capital Assets. Assetsare amortized over their expected useful lives at the following rates:

Boats and rafts 7 years straight-lineBuildings 10-25 years straight-lineComputer equipment 3 years straight-lineCommunity housing 20 years straight-lineTrails, docks and floats 10 years straight-lineEquipment 5-20 years straight-lineUtilities 20 years straight-lineVehicles 7 years straight-lineWork in progress Not amortized until put into use

Crab Fishing License The crab fishing licence provides the right for the holder to annually renewa related commercial fishing licence. The crab fishing licence waspurchased from an unrelated third party and is recorded at cost. Thecarrying cost is not amortized.

Revenue Recognition Revenue is recognized as it becomes receivable under the terms ofapplicable funding agreements. Funding received under the fundingarrangements, which relates to a subsequent fiscal period, is reflected asdeferred revenue in the year of receipt and classified as such on thestatement of financial position.

Rental revenue is recognized when a tenant commences occupancy andrent is due. The Nations retain all benefits and risks of ownership of theirproperty and, therefore, accounts for leases with its tenants as operatingleases.

All other revenue is recognized in the period in which the events that giverise to the revenue occurs.

Government Transfers Government transfers, which include legislative grants, are recognized inthe financial statements in the period in which events giving rise to thetransfer occur, providing the transfers are authorized, any eligibilitycriteria have been met, and reasonable estimates of the amount can bemade.

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March 31, 2019

Deferred Revenue Funds received for specific purposes which are externally restricted bylegislation, regulation or agreement and are not available for generalpurposes are accounted for as deferred revenue on the Statement ofFinancial Position. The revenue is recognized in the Statement ofOperations in the year in which it is used for the specified purposes.

Impairment of Long-livedAssets In the event that facts and circumstances indicate that the Nations' assets

may be impaired, an evaluation of recoverability would be performed.Such an evaluation entails considering the reduction in service capacity ofthe asset.

Liabilities forContaminated Sites Contaminated sites are a result of contamination of a chemical, organic

or radioactive material or live organism that exceeds an environmentalstandard, being introduced into soil, water or sediment. The liability isrecorded net of any expected recoveries. A liability for remediation ofcontaminated sites is recognized when all of the following criteria aremet:

i. an environmental standard exists;

ii. contamination exceeds the environmental standard;

iii. the Nations is directly responsible or accepts responsibility; and

a. is directly responsible; or

b. accepts responsibility; and

iv. a reasonable estimate of the amount can be made.

To date, no liability for contaminated sites has been reported.

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Huu-ay-aht First NationsNotes to Financial Statements

March 31, 2019

1. Prior Year Restatement

In the prior year, accounts payable and accrued liabilities and funds held in trust were overstatedby $1,800,329 and $168,449, respectively. As a result, Special Program expenses was overstated by$1,968,768. Prior year balances have been restated to correct these balances.

The impact of the restatement was to:Increase accumulated surplus at March 31, 2018 by $1,968,768Decrease total liability at March 31, 2018 by $1,968,768Increase net financial assets at March 31, 2018 by $1,986,768Decrease total expenses for the year ended March 31, 2018 by $1,968,768

2. Cash

Cash is held in one Canadian Chartered Bank and earns interest at the current prevailing rates forbusiness operating accounts.

3. Restricted Cash2019 2018

Operating reserve $ 9,704 $ 9,704Replacement reserve 33,296 30,314Forestry reserve 23,653 23,653

$ 66,653 $ 63,671

Replacement reserveUnder the terms of the agreement with Canada Mortgage and Housing Corporation ("CMHC"), thereplacement reserve account is to be credited in the amount of $3,000 (2018 - $3,000) annually.These funds, along with accumulated interest, must be held in a separate bank account and/orinterested only in accounts or instruments insured by the Canada Deposit Insurance Corporation oras may otherwise be approved by CMHC from time to time. The funds in the account may only beused as approved by CMHC. At year-end, this reserve was adequately funded (2018 - adequatelyfunded).

Operating reserveUnder the terms of the agreement with Canada Mortgage and Housing Corporation ("CMHC"),excess revenue over expenditures may be retained in an operating reserve. These funds, alongwith accumulated interest, must be held in a separate bank account and/or interested only inaccounts or instruments insured by the Canada Deposit Insurance Corporation or as may otherwisebe approved by CMHC from time to time. The funds in the account may only be used to offsetfuture deficits. At year-end, this reserve was adequately funded (2018 - adequately funded).

Forestry reserveUnder the term of the agreement with the Province of British Columbia, the forestry reserve isheld as security for the forestry permit issued by the Province. The funds are held in a guaranteedinvestment certificate bearing interest at 0.50% per annum and is set to automatically renew foran additional year upon maturing each year.

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March 31, 2019

4. Accounts Receivable

Accounts receivable by program area is summarized as follows:2019 2018

Canada Mortgage and Housing Corporation $ 769 $ 769GST and Provincial Sales Tax receivable (payable) (35,485) 185,676Other 192,298 769,513

$ 157,582 $ 955,958

5. Investments2019 2018

Market Book Market BookValue Value Value Value

Wealth FundTD Wealth 14,476,385 14,195,695 13,725,563 13,834,082

Settlement FundTD Wealth 1,080,680 1,061,024 1,026,305 1,030,877

$15,557,065 $15,256,719 $ 14,751,868 $ 14,864,959

Wealth Fund

As a result of treaty settlement, the Nations transferred funds received from various governmentorganization into an Invested Wealth Fund. The intent of this fund is to provide the Nations withperpetual investment income to help fund the increased administrative activities required tooperate a self-government body.

The wealth fund are currently invested in 49% (2018 - 60%) bonds and preferred shares with yieldsof 1.25-3.70% (2018 - 1.25-3.75%) and 51% (2018 - 40%) in equities.

Settlement Fund

The purpose of this fund is to hold and protect capital transfers and resource revenues intended forits beneficiaries: the Nations, other Huu-ay-aht settlement trusts, any registered charity or not-for-profit organizations that are qualified donees that in the opinion of the Trustees directly orindirectly benefits one or more Huu-ay-aht citizens, or a combination of the above mentionedentities and Persons.

The settlement fund are currently invested in 52% (2018 - 61%) bonds and preferred shares withyields of 1.25-3.70% (2018 - 1.25-3.75%) and 48% (2018 - 39%) in equities.

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March 31, 2019

6. Deferred Revenue

Deferred revenue represents funding received for programs/projects that were not completedduring the year.

Balance Additions Revenue BalanceMarch 31, 2018 recognized March 31, 2019

Operating Fund Province of British Columbia $ 41,822 $ 1,167,884 $ 152,415 $ 1,057,291 Government of Canada - 8,439,211 8,164,738 274,473Other - 189,667 - 189,677

$ 41,822 $ 9,796,762 $ 8,317,153 $ 1,521,441

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March 31, 2019

7. Long Term Debt2019 2018

Royal Bank of Canada, term loan, repayable in monthlyinstallments of $17,494 (2018 - $17,381) including interest atprime per annum, maturing July 2020. $ 1,024,493 $ 1,192,908

Royal Bank of Canada, term loan, repayable in monthlyinstallments of $2,733 including interest at 2.85% per annum,maturing August 2019 319,385 342,716

Royal Bank of Canada, term loan, repayable in monthlyinstallments of $1,336 including interest at 2.85% per annum,maturing July 2018 - 167,496

Royal Bank of Canada, term loan, repayable in monthlyinstallments of $2,733 including interest at prime plus 0.50%per annum, maturing March 2022 6,000,000 -

All Nations Trust Company, mortgage, repayable in monthlyinstallments of $1,120 including interest at 1.82% per annum,maturing September 2019 125,647 136,703

Maa-Nulth Treaty loan, repayable in annual installments of$546,224 including interest of 4.545% per annum, maturingApril 2020 1,068,518 1,022,236Nuu-Chah-Nulth Economic Development Corporation (NEDC),repayable in annual installments of $37,400 including interestof Bank of Montreal Prime rate plus 1.00% per annum, maturingOctober 2037 458,077 -

$ 8,996,120 $ 2,862,059

The estimated principal repayments on the above long term debt required over the next threeyears are as follows:

2020 $ 2,979,0592021 3,401,9322022 2,113,6242023 34,0592024 31,651Thereafter 435,795

$ 8,996,120

The Royal Bank of Canada loans are secured by the security outlined in Note 14.

The Maa-Nulth Treaty loan is secured by a time limited treaty payment known as a capitaltransfer. If the loan payment not made during the year, the Federal government will reduce thecapital transfer payment by the loan payment amount.

The NEDC loan is secured by a first position over the commercial crab licence.

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March 31, 2019

8. Due from (to) Related Parties2019 2018

Due from HFN Development $ 221 $ 221Due from HFN LNG Development - 414,667Due from HFN Forestry 651,718 2,055Due from HFN Land 1,800,000 2,043,423Due from HFN Hospitality 23,097 -Due from HFN Management 152 -Due to HFN Gravel (21,126) -Due to HFN Market (8,230) -

2,445,832 2,460,366

Due from HFN Settlement Funds 41,677 41,277

$ 2,487,509 $ 2,501,643

The above entities are directly or indirectly controlled by the Nations.

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March 31, 2019

9. Tangible Capital Assets

2019

Land Building Boats and raftsComputer

equipment EquipmentCommunity

housing UtilitiesTrails, docks

and floats VehiclesWork in

progress Total

Cost, beginning of year$ 10,761,250 $ 11,438,708 $ 110,771 $ 334,834 $ 1,088,392 $ 995,052 $ 4,338,107 $ 1,462,498 $ 510,257 $ 853,584 $ 31,893,453

Additions3,632 258,036 35,796 7,526 64,640 - - 36,090 120,531 2,001,664 2,527,915

Disposals- - - - - - - - (69,295) - (69,295)

-

Cost, end of year$ 10,764,882 $ 11,696,744 $ 146,567 $ 342,360 $ 1,153,032 $ 995,052 $ 4,338,107 $ 1,498,588 $ 561,493 $ 2,855,248 $ 34,352,073

Accumulated amortization,beginning of year

$ - $ 4,587,589 $ 94,762 $ 296,630 $ 607,357 $ 749,730 $ 1,820,732 $ 518,139 $ 218,802 $ - $ 8,893,741Amortization

- 485,313 8,294 31,549 72,205 14,520 213,699 132,224 76,673 - 1,034,477Disposals

- - - - - - - - (34,648) - (34,648)

Accumulated amortization, end of year

$ - $ 5,072,902 $ 103,056 $ 328,179 $ 679,562 $ 764,250 $ 2,034,431 $ 650,363 $ 260,827 $ - $ 9,893,570

Net carrying amount, end of year

$ 10,764,882 $ 6,623,842 $ 43,511 $ 14,181 $ 473,470 $ 230,802 $ 2,303,676 $ 848,225 $ 300,666 $ 2,855,248 $ 24,458,503

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March 31, 2019

9. Tangible Capital Assets (continued)

2018

Land Building Boats and raftsComputer

equipment EquipmentCommunity

housing Utilities Trails, docks

and floats Vehicles Work in

progress Total

Cost, beginning of year$ 7,209,434 $ 10,082,263 $ 110,771 $ 307,337 $ 739,197 $ 995,052 $ 4,338,107 $ 797,546 $ 461,903 $ 228,935 $ 25,270,545

Additions3,551,816 1,356,445 - 27,497 349,195 - - 664,952 48,354 624,649 6,622,908

Cost, end of year$ 10,761,250 $ 11,438,708 $ 110,771 $ 334,834 $ 1,088,392 $ 995,052 $ 4,338,107 $ 1,462,498 $ 510,257 $ 853,584 $ 31,893,453

Accumulated amortization,beginning of year

$ - $ 4,138,795 $ 89,026 $ 241,850 $ 550,018 $ 734,775 $ 1,607,032 $ 389,522 $ 149,362 $ - $ 7,900,380Amortization

448,794 5,736 54,780 57,339 14,955 213,700 128,617 69,440 - 993,361

Accumulated amortization, end of year

$ - $ 4,587,589 $ 94,762 $ 296,630 $ 607,357 $ 749,730 $ 1,820,732 $ 518,139 $ 218,802 $ - $ 8,893,741

Net carrying amount, endof year

$ 10,761,250 $ 6,851,119 $ 16,009 $ 38,204 $ 481,035 $ 245,322 $ 2,517,375 $ 944,359 $ 291,455 $ 853,584 $ 22,999,712

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March 31, 2019

10. Accumulated Surplus2019 2018

Operating surplus $ 9,204,386 $ 14,268,764Investment in Enterprises Fund 25,009,540 14,634,099Investment in Wealth Fund 14,195,695 13,834,082Investment in Settlement Fund 1,061,024 1,030,877Investment in Tangible Capital Assets 24,024,431 21,231,301Replacement and Operating Reserves 17,516 16,792

$73,512,592 $ 65,015,915

11. Investments in the Nations' Business Entities

The following period of financial information was used to determine the amount of theinvestment in the Nations' business activities:

Limited Partnerships

HFN Development Limited Partnership January 1, 2018 - December 31, 2018Nuu-chah-nulth Seafood Limited Partnership January 1, 2018 - December 31, 2018

Corporations

HFN Development Corporation January 1, 2018 - December 31, 2018Nuu-chah-nulth Seafood Development Corporation April 1, 2018 - March 31, 2019

Purpose

HFN Development combines all of the economic development activities for the Nations.Nuu-chah-nulth Seafood Limited Partnership was established to create a profitable yet sustainableseafood business.

2018Investment

carryingvalue

Share ofearnings

(loss)Capital

contributions Capital draws

2019Total

investmentWholly-owned Businesses:

HFN Development LimitedPartnership $ 11,971,822 $ 7,042,946 $ 29,000 $ - $ 19,043,768

HFN Development Corporation(46,199) (630) - - (46,829)

11,925,623 7,042,316 29,000 - 18,996,939

First Nation Business Partnership -Modified Equity:

Nuu-cha-nulth Seafood LimitedPartnership - 16.67% 415,882 110,786 - 29,000 497,668

Nuu-chah-nulth SeafoodDevelopment Corporation - 16.67% 34,374 - - - 34,374

450,256 110,786 - 29,000 532,042

$ 12,375,879 $ 7,153,102 $ 29,000 $ 29,000 $ 19,528,981

-

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March 31, 2019

11. Investment in the Nations' Business Entities (continued)

Summary financial information of the Nations' business partnership and enterprises accounted for using the modified equity method for their respectiveyear-end is as follows:

2019 2018

Assets Liabilities Net Assets Revenue Expenses

TotalEarnings

(Loss)

TotalEarnings

(Loss)

Limited Partnerships

HFN Development LP $ 19,320,239 $ 405,059 $ 18,915,180 $ 7,058,360 $ 15,414 $ 7,042,946 $ 2,709,793NSLP - - - 179,510 68,724 110,786 170,783

Subtotal 19,320,239 405,059 18,915,180 7,237,870 84,138 7,153,732 2,880,576

Corporation

HFN Development Corporation 8 12,333 (12,325) - 630 (630) (1,051)

$ 19,320,247 $ 417,392 $ 18,902,855 $ 7,237,870 $ 84,768 $ 7,153,102 $ 2,879,525

22


March 31, 2019

12. Portfolio Investment

On December 13, 2018, the Nations entered into an agreement with Western Forest Products toacquire an interest in Tree Farm Forest Licence 44. The result of this transaction is that theNations owns 7 limited partnership units in an entity known as TFL44LP. The Nations does nothave a controlling interest in TFL44LP and the investment is accounted for as a portfolioinvestment recorded at its cost (including related acquisition costs) of $7,968,068.

13. Comparative Figures

Certain comparative amounts presented in the financial statements have been restated toconform to current year's presentation.

14. Line of Credit

The Royal Bank of Canada has approved an operating line of credit up to $1,000,000 at the bank'sprime lending rate. At March 31, 2019, this availability of the facility is $35,000 (2018 -$20,000). A general security agreement covering all assets of the Nations is pledged for this creditfacility, in addition to a first charge on all inventory, mortgages on real property, assignment ofstumpage proceeds, and guarantee and postponement of claim by several of the Nations'controlled entities.

15. Budget Amounts

The budget amounts were prepared by management and approved by the Nations for the yearending March 31, 2019.

23


March 31, 2019

16. Contractual Rights

During the year, the Nations entered into the following agreements:

Through HFN Forestry Consulting Services Limited Partnership, an agreement with TFL 44LP to provide consulting services in exchange for an annual fee of $375,000 for anindefinite term.

A grant with the Vancouver Foundation for children social services of $99,780 over thenext three years ending in 2022.

A funding agreement through Nuu-chah-nulth Tribe Council (NTC) with the Federal andProvincial government for delivery of services and programs to NTC communities of$839,800 annually until April 30, 2022.

Amounts anticipated to be received over future years are as follows:

2020 $ 1,314,5802021 1,314,5802022 1,314,580

$ 3,943,740

17. Minor Trust Reserve

Under the Tribunal order, the Nations decided to set aside $1,607,806 (2018 Restated -$1,631,880) for all minors to receive accumulated dividends upon becoming legal age (19 yearsold). In the current year, a dividend of $300 (2018 - $6,000) was determined. The funds arecurrently held in a Canadian chartered bank. No legal trust has been set up for this minor trustreserve.

24


March 31, 2019

18. Segment Disclosure

The Nations are a diversified First Nations organization that provides a wide range of services toits citizens. Distinguishable functional segments have been separately disclosed in the segmentedinformation. The nature of the segments and the activities they encompass are as follows:

Government Services This service area provides the structure of government and legislation for the Nations as well asthe administrative services needed to support the government operations, including the Executivecouncil, People's Assembly, Committees of Council, Executive Director, financial and humanresource services and treaty implementation. Additionally, this service area is responsible for themanagement of public works and capital infrastructure including maintenance of capitalinfrastructure, provision of residential services in the Anacla community and operations of theHouse of the Nations and the multi-use building. Also, the service area is responsible for themanagement of government lands and natural resources, including the management of fisheries,forest harvesting and other uses of the land base, identification and protection of cultural sitesand acquisition and distribution of cultural food.

Economic DevelopmentThis service area provides for the development of economic opportunities to the Nations.

Community ServicesThis service area provides for health-related services, social services, childcare services andeducation services.

Special ProgramsThis service area provides for supporting any special projects that the Nations pursues.

25

Huu-ay-aht First Nations

For the year ended March 31, 2019

Budget 2019 2019 2018Expenses ACRD 25,130$ 25,531$ 23,955$

Admin Fees 1,000 - -

Advertising & Promotion 151,200 698,182 44,182

Amortization 1,034,476 992,765

Bad Debt Expense 954,505 -

Citizen Dividend 680,000 1,192,747 4,742,201

Consulting 4,112,600 3,390,518 1,899,806

Counselling/Mental Health 104,000 312,535 103,193

CRA Penalties 359,344 -

Dental Fees - 748 2,123

DIA 31,000 30,471 30,471

Education 343,700 368,726 194,566 Elders Benefits 618,000 590,500 566,000

Fish 142,500 115,923 119,821

Furniture & Equipment 32,500 26,884 19,382

Honoraria 194,200 62,549 75,092

Insurance 71,150 86,269 67,280

Inter. & Bank Charges 330,065 178,276 223,608

Kiixin Program Expenses - - 246,403

Maa-nulth Allocation 240,000 236,851 214,038

Management Fees 2,400 2,400 Materials & Supplies 438,404 157,409 119,692 Med. Supplies & Prescriptions 68,000 27,866 26,196 Meetings 711,900 573,231 283,484 Miscellaneous 15,900 15,119 28,026 NTC Fee 280,800 295,840 173,250 Occupational Skills Training 136,400 199,143 54,398 Office Equipment Lease 11,000 8,760 10,532 Office Supplies 146,000 141,486 69,802 Patient Travel 75,000 188,227 86,583 Prior Year Adjustment - 6,873 30,897 Professional Development 232,000 67,768 69,510 Professional Fees 1,569,000 1,417,840 1,573,892 Program Expenses 1,152,016 604,260 618,078 Rent & Property Taxes 30,000 63,662 38,548 Repairs & Maintenance 174,000 284,846 114,748 Salaries and Benefits 4,823,181 4,186,511 3,590,374 Social Assistance 64,272 64,724 43,477 Social Services Jurisdiction - 314 235,580 Telephone 102,500 98,130 92,130 Travel 400,800 441,826 294,530 Tribunal 75,000 28,356 23,977 Tuition & Trades Program 342,223 221,080 391,473 Tutors 1,725 15,653 11,382 Utilities 72,500 84,515 70,223

17,999,666$ 18,860,876$ 17,618,067$

Expenses by object

Schedule 1

Huu-ay-aht First Nations

For the year ended March 31, 2019

2019 2019 2018Budget Actual Actual

RevenueINAC 3,007,441$ 5,367,035$ 3,356,175$

Treaty 2,603,455 2,603,455 2,603,455

Resource Revenue - Federal 109,942 110,593 109,291

Fish funding 83,654 83,655 80,967

Total INAC 5,804,492 8,164,738 6,149,888

Investment Income 600,000 391,760 1,496,265

Provincial Annual Funding 41,822 41,822 41,822

Resource Revenue - Prov 109,942 110,593 109,291

Total Province of BC 151,764 152,415 151,113

Nuu-chah-nulth Tribal Council - 18,904 18,904

Cost Recoveries - permits, leas - 35,455 12,168

Other Income - TSL Harvest 1,894,656 1,798,115 1,684,268

HGB Dividend 1,400,000 - -

Property taxes - 31,505 33,144

Other Income 38,500 515,047 554,063

Sale of tangible assets 10,353

Contracts - 25,293 37,337

Total Other 3,333,156 2,380,312 2,308,811

9,889,411 11,143,583 10,137,149

Expenses ACRD 25,130 25,531 23,955

Admin Fees 1,000

Advertising & Promotion 30,000 667,026 13,817

Citizen Dividend 680,000 1,192,747 -

Consulting 378,000 171,171 149,530

Fish 142,500 115,923 119,821

Furniture & Equipment 32,500 26,884 19,382

Honoraria 175,000 39,731 62,915

Insurance 63,000 82,433 67,280


Maa-nulth Allocation 240,000 236,851 214,038

Materials & Supplies 195,300 84,674 79,006

Meetings 179,500 307,135 209,071

Miscellaneous 12,100 6,950 4,158

Office Equipment Lease 11,000 8,760 10,532

Office Supplies 72,600 84,273 66,097

Prior Year Adjustment - 6,873 30,897

Professional Development 164,000 48,999 38,097

Professional Fees 594,000 531,215 660,730

Program Expenses 148,000 44,720 32,386

Rent & Property Taxes 30,000 53,451 31,274

Repairs & Maintenance 174,000 284,846 114,748

Salaries and Benefits 2,793,117 2,465,850 2,194,558

Telephone 99,400 94,827 89,304

Transportation - - -

Travel 196,500 274,297 200,913

Tribunal 75,000 28,356 23,977

Utilities 70,000 83,738 67,509

6,661,712 7,065,534 4,676,786

Surplus (deficit) 3,227,699$ 4,078,050$ 5,460,363$

Government Services

Schedule 2

Huu-ay-aht First NationsEconomic DevelopmentFor the year ended March 31, 2019Schedule 3


Revenue Earnings from the Nations' Business Partnerships 7,153,732$ 2,880,576$ Loss from the Nations' Business Enterprise (630) (1,051) Cost Recoveries - permits, leases - 1,120 - Hydro Project Grants - 87,926 -

- 7,242,148 2,879,525

Expenses Advertising & Promotion 25,200 7,387 - Consulting 391,000 238,406 21,571 DIA 31,000 30,471 30,471 Insurance 8,150 3,836 - Kiixin Program Expenses - - 246,403 Materials & Supplies 21,000 40,711 2,465 Meetings 71,900 37,989 13,396 Office Supplies 12,900 19,163 1,284 Professional Development 14,000 902 4,440 Professional Fees 25,000 48,058 22,658 Program Expenses 50,000 10,000 10,000

Rent & Property Taxes - 2,525 - Salaries and Benefits 362,929 205,417 178,639 Travel 60,600 14,021 6,536

1,073,679 658,887 537,865

Surplus (deficit) (1,073,679)$ 6,583,261$ 2,341,660$

Huu-ay-aht First NationsCommunity ServicesFor the year ended March 31, 2019Schedule 4


Revenue Nuu-chah-nulth Tribal Council 40,000$ 249,150$ 164,512$ Gov't Canada & BC - Childcare and Education - 89,570 60,841 Cost Recoveries - permits, leases - 169,411 119,213 Other Income 20,000 843,369 54,317

60,000 1,351,500 398,883

Expenses Amortization 1,023,421 981,908 Advertising & Promotion 31,000 22,419 21,942 Consulting 243,600 64,192 (10,291) Counselling/Mental Health 104,000 312,535 103,193 Dental Fees - 748 2,123 Elders Benefits 618,000 590,500 226,400 Education 343,700 368,726 194,566 Honoraria 16,200 20,718 7,681 Materials & Supplies 184,654 29,258 19,690 Med. Supplies & Prescriptions 68,000 27,866 26,196 Meetings 270,000 163,034 39,249 Miscellaneous 3,800 8,170 23,869 NTC Fee 280,800 295,840 173,250 Occupational Skills Training 136,400 100,865 6,182 Office Supplies 10,500 3,182 2,421 Patient Travel 75,000 188,227 86,583 Professional Development 24,000 15,828 26,972 Professional Fees 200,000 24,816 4,882 Program Expenses 954,016 448,464 149,864 Salaries and Benefits 1,542,735 1,177,464 856,458 Social Assistance 64,272 64,724 43,477 Social Services Jurisdiction - 314 235,580 Telephone 3,100 3,302 2,827 Tutors 1,725 15,653 11,382 Travel 38,700 41,177 18,255 Tuition & Trades Program 342,223 220,879 225,641 Utilities 2,500 777 2,713

5,558,925 5,233,100 3,483,012

Surplus (deficit) (5,498,925)$ (3,881,600)$ (3,084,129)$

Huu-ay-aht First NationsSpecial ProgramsFor the year ended March 31, 2019Schedule 5


Revenue AANDC -$ -$ 14,285,894$

Cost Recoveries - permits, leases - 30,786 576,970

Grants 3,500 31,240

CMHC 26,235 26,235

LNG Generations Funding - - 100,000

LNG Capability - - 175,000

LNG PA 9,940,000 7,455,000 11,408,573

WFP E&T Fund - 98,278 187,500

Total Industry Funds 9,940,000 7,553,278 11,871,073

9,940,000 7,613,799 26,791,412

Expenses Advertising & Promotion 65,000 1,350 8,423

Amortization 11,055 10,857

Bad Debt Expense 954,505

Citizen Dividend - - 4,742,201

Consulting 3,100,000 2,916,749 1,738,996

CRA Penalties 359,344

Education - - -

Elders Benefit - - 339,600

Honoraria 3,000 2,100 4,496


Management Fees 2,400 2,400

Materials & Supplies 37,450 2,766 18,531

Med. Supplies & Prescriptions - - -

Meetings 190,500 65,072 21,768 Occupational Skills Training - 98,278 48,216

Office Supplies 50,000 34,868 -

Professional Development 30,000 2,040 -

Professional Fees 750,000 813,751 885,621

Program Expenses - 101,076 425,828

Property Taxes - 7,686 7,274

Salaries and Benefits 124,400 337,779 360,719

Travel 105,000 112,332 68,826

Tuition & Trades Program - 201 165,832

4,705,350 5,903,355 8,920,404

Surplus (deficit) 5,234,650$ 1,710,444$ 17,871,008$

huu-ay-aht first nations financial statements for the year ... · hfn as at march 31, 2019 and its...

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